When the Apple App Store for the iPhone was first announced, users were very excited about the prospect of being able to add games and extend the functionality of the iPhone via software. Some, however, were not certain that having to buy software to add features many feel should have been included on the iPhone to begin with would prove to be popular.
In June of 2008, an analyst from investment bank Piper Jaffray said that the App Store could prove to be a business worth over $1 billion by 2009. The Wall Street Journal (WSJ) reports that the App Store sold about $30 million in applications after the end of its first full month of sales. In all, Apple CEO Steve Jobs says that over 60 million applications were downloaded from the App Store -- most of them free applications.
If sales remain at the pace the App Store set its first month, Apple would make about $360 million a year. Jobs points out that Apple only gets to keep 30% of the money made from the App Store -- the other 70% goes to the App developers. The WSJ quotes Jobs saying, "This thing's (the App Store) going to crest a half a billion, soon. Who knows, maybe it will be a $1 billion marketplace at some point in time."
The WSJ reports that software developers are surprised by the popularity of their applications for the iPhone. Sega Corp. says that it has already sold over 300,000 copies of its $9.99 Super Monkeyball game in the first 20 days it was available. Sega's U.S. president Simon Jeffery said, "That's a substantial business. It gives iPhone a justifiable claim to being a viable gaming platform."
Apple is looking at the App Store in the same way it looked at selling music for its iPod. Rather than trying to make huge sums of money off applications sold in the App Store -- Apple expects the App Store will drive sales of the iPhone.
Jobs told the WSJ, "Phone differentiation used to be about radios and antennas and things like that. We think, going forward, the phone of the future will be differentiated by software."
Jobs also confirmed for the WSJ that there is in fact a kill switch built-in that will allow Apple to remotely kill and remove any application sold via the App Store from a user's iPhone. Jobs says that Apple needs such an ability in case it inadvertently allowed a malicious application to be sold through the App Store. Jobs said that the kill switch would be needed, for example, if an application were found to be stealing a user's personal data.
Jobs said, "Hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull."
DailyTech reported last week that a rumor was suggesting that Apple could remotely terminate Apps on the iPhone. Apple also says that it has already removed one application from the App Store called I Am Rich. The application in question sold for $999.99 and did nothing other than display a glowing red gem on the screen of the iPhone.
Creator of the I Am Rich application, Armin Heinrich, says that he thought he followed the rules Apple has for developers when designing his application. An Apple representative said that Apple made a "judgment call" on removing the application from the store. There is no word on whether or not anyone had actually purchased the I Am Rich application, leading to the need to use the kill switch. Apple was also not clear on if consumer who bought applications that were remotely terminated would be refunded the amount of the purchase price.